The Future of Retail Over The Next Five Years, with Joaquin Villalba, CEO of Nextail
I had the pleasure of interviewing Joaquin Villalba. As the co-founder and CEO of Nextail, a cloud-based platform that combines artificial intelligence and prescriptive analytics to improve retailers’ inventory management processes and store operations. Previously, Joaquin was the Head of European Logistics for Zara-Inditex, the world’s largest fashion retailer. In that capacity, he oversaw more than a thousand retail stores with over $10 billion in annual sales, and led technical innovation for the company. His experience at Zara-Inditex and advising international retailers on how to improve their operations led to the idea of creating the Nextail platform.
Thank you so much for joining us! Can you tell us a story about what brought you to this specific career path?
As an engineer by training, I’ve always been fascinated by improving the way things work. Once I entered the world of retail, I saw an opportunity to reinvigorate the industry by using technology. I often saw frustrated customers not finding what they wanted, and it’s because retailers had very static processes in place so they could not react quick enough to customer demand or enhance the experience. During my time at Zara-Inditex, I often reflected on what drove the founder of Inditex, Amancio Ortega, to pursue a more innovative retail concept. It was the operational inefficiencies and inaccessibility of retail at that time. His dissatisfaction with the existing retail model fueled his inspiration, which is exactly how I felt with Nextail. We want to improve commerce by allowing retailers to transform how they buy new collections and distribute products, using data-driven decisions.
Can you share the most interesting story that happened to you since you started your career?
We are methodical about our strategic growth at Nextail. As such, we avoided award shows due to our prioritization of resources. During the early stages of the company, the team was focused on product development and serving our early clients and not on marketing. Last year at South Summit, one of the leading startup conferences in Europe, Nextail was nominated as one of the world’s most innovative startups. To our surprise, out of 3,000 startups, we won the award for Best Lifestyle & Fashion Startup and were invited to present to a global audience. Right after the presentation we were awarded Best Startup Team in all categories. It was unexpected and exciting! We found that the visibility Nextail received encouraged and fueled our passion and strategic direction.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
In our early days of Nextail, our first six employees were all men, from Spain, with engineering degrees. We were excited to hit the ground running, and had just started working with a leading cosmetics retailer. We quickly learned we needed to strategically grow our team to incorporate different areas of expertise and perspectives, in order to fully understand the nuances of all our client’s needs, and to relate to a majority of their consumers. It was a powerful wakeup call. From that day on, we committed to building a team and company culture that encouraged and celebrated diversity. We’re proud to say that we’re achieving that goal, and we continue to foster it. As a global company, it is critical to have a team that accurately represents and reflects your mission and business goals. Currently we are an international team with more than ten nationalities and almost 30 percent women. We actively recruit people from different backgrounds.
What do you think makes your company stand out? Can you share a story?
Nextail stands out because we speak the language of the industry and we have experienced the same challenges many of our clients are facing. Our DNA is fashion retail. We understand what’s needed for retailers to thrive in today’s market. We enhance the customer experience by applying the latest technologies to help retailers make better data-driven decisions. It’s important to know the industry that you’re in so you can stand out.
Recently, we were presenting to the board of a Spanish retailer. After 30 minutes, the chairman asked, “You’re not a tech person, right?” He was amazed that he could understand everything I said. It’s very difficult in our world; typically there are two conversations taking place in parallel — one with senior executives who think on a strategic level about the overall business, and the other with the IT team discussing the technical approach. We’re able to merge both worlds by explaining complex concepts of agile technology supported by AI in a way that is relatable to retail businesses, which is often hard to do.
Instinct has been used to make many pertinent decisions in the fashion retail world, from design to distribution. Design is difficult to measure, but distribution is not; analytics lie behind many distribution processes, and our clients appreciate how we empower them to have data-driven operations.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
Burning out is a concern in all industries. The previous generation of retail has piled up significant inefficiencies when dealing with everyday operations, specifically related to buying and merchandising, and relying heavily on spreadsheets to carry out time consuming, manual processes. Without the right analytic capabilities and automation in place, retailers find data to be overwhelming because they don’t know how to deal with it in large amounts. They are used to one or two collections per season, and have many iterative back-end processes which could be eliminated by using advanced technologies. The key to thriving in this industry is being open to new ideas and partnering with innovative technological providers to optimize business operations.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
My wife, Rocio. We met in Madrid when Nextail was not even incorporated as a company, and the startup team was just myself and a junior manager. I was moving to Miami for a startup accelerator, and Rocio was about to embark on a new career opportunity in Madrid after having left Bain, the strategy consulting firm. This was about four years ago. We had only dated for a few weeks but I knew she was the one. And it seems like she knew too, as she clearly bet on the relationship (or the startup?!) and decided to come and join me at the accelerator in Miami for five amazing weeks.
Things moved very quickly, and soon after the incorporation of the company, later that year, we got married. From the beginning, Rocio has been a sounding board for key strategic decisions made at Nextail and our most prolific headhunter. It’s been incredibly rewarding! We have two-year old twins, Joaquin and Pablo, and recently welcomed a baby girl into the world Mabel, who is now six months old. At Nextail we laugh at the fact that with every baby, we close a financing round and both families keep growing.
Additionally, the Nextail story would have been very different without Carlos, my co-founder. We met long before whilst studying engineering together in Valencia, and our friendship has continued to grow alongside the new heights we’ve reached as business partners. It’s important to have people you trust around you, plus it’s more fun to celebrate the successes with those who have shared the same journey!
Are you working on any exciting projects now?
There’s lots of exciting things happening at the moment! In terms of product development, we’re currently working on a new application, smart fulfilment. Smart fulfilment, is about having products in customers hands within two hours or sooner, by shipping it from nearby stores with overstocks of that item. It means retailers are not losing sales in-store by fulfilling online orders, and at the same time meets customers needs for quick delivery, improving the shopping experience. We also integrate it with new generation last mile delivery partners who can speed up the process.
Our entry into the U.S. market this year is also really exciting. We’ve been growing fast in Europe and this year we opened an office in New York City’s Meatpacking District, from where we plan to replicate our European success. We chose NYC because we wanted our first American location to be convenient for travel and relevant to our targeted clientele.
How have you used your success to bring goodness to the world?
We see our vision of making the retail world a better place, by helping both retailers and end-consumers. We are freeing our clients from using generation-old systems and allowing them to become more agile through automation and machine learning algorithms. This operational excellence means improved margins for the retailers, and a superior shopping experience for their customers. We’re helping them find and buy the products they love, by substantially reducing the possibility of a product not being available in their size.
Can you share 5 examples of how retail companies will be adjusting over the next five years to the new ways that consumers like to shop?
- Even if people are more and more digitally connected these days they feel more isolated. I believe that the retail store will be more personal, more fun and more relevant to the consumer who walks in, rather than providing a uniform and staid experience. For example, there has been a recent trend of e-commerce brands that have opened their own brick-and-mortar stores in the past year — including Allbirds, Bonobos, UNTUCKit, Fabletics, ModCloth and Rent the Runway, who are weaving digital touch points and apps with their physical presence. Brands need to be malleable and adjust to improving the client experience. Visual merchandising will also see a shift, showing collections in a way that’s easier for a prospective shopper to understand the brand they want to communicate.
- Retail will see a greater adoption of AI in all aspects of operations — including manufacturing, logistics, sales, customer recommendations and payments. According to a discussion paper from McKinsey & Company this year, AI has the greatest potential to create value, with retail considered as the highest valued opportunity at over $600 billion. Supply-chain management is the key area that could benefit from AI deployment in consumer goods. We are already seeing the shift towards retailers implementing AI happen, with this technology helping to enhance each individual’s shopping experience.
- Retail companies will have to better connect the offline and online shopping worlds to their clients. They want to serve the client in the most effective way, and it’s becoming expensive to compete online. Much of an eCommerce company’s budget goes towards online marketing, but it’s essential to create a methodical balance of both. Using data will only become more beneficial to the brand and enable companies to understand their clients better.
- Smart fulfilment, one of Nextail’s current projects, will be a key solution for the ever-growing players in unified retail commerce. It’s clear that technology has fueled the rise of physical stores, rather than hindered it, and our next release will ensure both physical and online stores in the network can succeed in harmony by maximizing sales probability across both.
- Retailers will have to adapt and reduce the friction that exists in a physical store, for instance in the checkout process. Many companies already are making these processes more automatic — for example, Amazon Go has been rolling out facial recognition for frictionless checkout at its convenience stores — and this trend will only continue to maximize efficiency for the customer.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
I think it’s important that industry leaders are educated on bringing innovative data-driven solutions to decision making. People are often hesitant to transition into new technologies, but if we can continue to highlight how sophisticated technologies like AI, machine learning and analytics deliver tangible benefits, this can create a greater ripple effect to creating new innovations in all sectors. Using a smart data approach, we ensure long-term brand profitability by letting retailers sell more with less stock and bring agility to their operations, so they can stay ahead of competition. In this way their company can evolve, in the same way our platform does, so they can take a new approach to merchandising, sell more product full price and in turn, generate higher profit margins.
How can our readers follow you on social media?
LinkedIn: Joaquin Villalba; Twitter: @NextailLabs
Thank you so much for joining us, this was a great interview!